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UN World Population Prospects, 2008 rev Declining Global Population Rate
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California, America and the World to 2050
Presentation to the California Bankers Association by Joel Kotkin, Distinguished Presidential Fellow,
Chapman UniversitySanta Barbara, CA January 11, 2013
Long Term Fundamentals
• U.S. has healthier long-term demographics than most competitors
• U.S. only advanced country with large, growing population
• We still have a significant resource, energy, land and water base
• Growth will come --- but how about California?
0
1000000000
2000000000
3000000000
4000000000
5000000000
6000000000
7000000000
8000000000
9000000000
0%
2%
4%
6%
8%
10%
Less developed regionsMore developed regions
Gro
wth
Rat
e
Growth Rate
UN World Population Prospects, 2008 rev
Declining Global Population Rate
More Crowding to Come: US Population Growth 1960-2050
Source: Bureau of the Census, CensusScope
1960 1970 1980 1990 2000 2010 2020 2030 2040 20500
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
450,000,000
5
Labor Force Growth
U.S. Census Bureau, International Database
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050-45%
-35%
-25%
-15%
-5%
5%
15%
25%
35%
45%
United States 37%
Korea -30%
Europe -21%
China -10%
Japan -39%
Growth in Age 15-64
In a post-industrial age, stuff still matters…
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
UnitedStates
Canada Australia Germany UnitedKingdom
China India SouthKorea
Arable Land (thousand hectares)
Room to Grow Total Arable Land
North Americ
a
South Americ
a
EuropeAfric
aAsia
0.0080.008
0.002
0.006
0.002
Freshwater Reserves per CapitaCubic Kilometers per Person
Ag Exports Increasing
Driven by solid worldwide demand, increased productivity, and strong commodity prices, America’s ag sector has seen overall export levels steadily increase over the past decade.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201140.0
60.0
80.0
100.0
120.0
140.0
US Ag Exports, 2000-2011
Billi
ons o
f Dol
lars
Source: USDA Economic Research Service
Leading in Gas Production
United StatesRussia
European UnionCanada
IranQatar
NorwayChina
NetherlandsAlgeria
Saudi ArabiaIndonesia
611,000,000,000
588,900,000,000
182,300,000,000
152,300,000,000
138,500,000,000
116,700,000,000
106,300,000,000
96,800,000,000
85,170,000,000
85,140,000,000
83,940,000,000
82,800,000,000
Natural Gas Production, Billions of Cu M
CIA World Factbook
TexasOklahoma
ColoradoCaliforniaLouisiana
PennsylvaniaKansasFlorida
New MexicoNorth Dakota
OhioWyomingArkansas
West VirginiaIllinois
MichiganMississippi
AlaskaUtah
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000
Oil and Gas Extraction Job Growth, 2001-2011
Source: EMSI Complete Employment, 2011.4
0%
1%
2%
3%
4%
5%
6%
1.7
4.7
5.2
Real GDP Industrial Production: Manufacturing 2011 2011 Feb. 2011 to Feb. 2012
Growth Rates: Real GDP vs. Manuafacturing
New Drivers of Growth for US States
• Back to Basics Economics• Rise of Commodities• Energy Revolution
• Favorable Demographics
GDP GrowthDecember 2001-December 2011
Color threshold is Zero
Employment GrowthDecember 2001-December 2011
Color threshold is Zero
NY
CA
IL
MI
OH
PA
GA
NC
TX
FL
-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5
Millions: Net Domestic Migration
Domestic Migration by State: 2000-200910 LARGEST STATES
Data fromCensus Bueau
-151
-215
-389
-434
-384
-256
-151
-92 -81-63
-46
-120-97
-160
-249
-313
-265
-143
-99
-54 -51
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Domestic Migration
Center for Economic Research and ForecastingCalifornia - (thousands of persons)
Day after day more people moving away
Net Outflows to Blue Net Inflows from Orange
IRS Tax Return Data. Net flow of tax return exemptions
Los Angeles County Net Migration Flows, 2000-2010
Top Inflows of Gross Income Due to Net Migration, 2004-2008
O’Neil Center for Global Markets and FinanceSMU Cox School of Business
DetroitSan Francisco
ChicagoSt. Louis
Los AngelesColumbus
MinneapolisNew York
PhiladelphiaDenver
BaltimoreTampaAtlanta
DallasSan Diego
SeattleMiami
WashingtonHoustonPhoenix
Riverside
-11.4%-4.8%
-0.5%1.2%1.4%
1.9%2.0%2.1%2.3%
3.2%5.1%
5.9%6.2%
6.8%7.0%7.5%
8.6%10.8%
13.4%17.9%
21.3%
Employment Change, 2001-2011
Metropolitan AreasMeasures job change Mar-May2001 to Mar-May 2011. Source: U.S. Bureau ofLabor Statistics Current Employment Survey
California Smaller Part of U.S. Economy
11.4%
11.2%
10.9%
10.6%10.7%
10.8%
11.0%11.1% 11.1% 11.1%
11.0%
10.8%10.7%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
California Nonfarm Jobs as a share of United States
Center for Economic Research and ForecastingCalifornia - (percent of U.S.)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Jan-07Jul-07Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12
Percent of Labor Force
California Unemployment RateSeasonally Adjusted Data
California Unemployment RateSeasonally Adjusted Data
United States Unemployment RateSeasonally Adjusted Data
90.0
95.0
100.0
105.0
110.0
115.0
120.0
125.0
130.0
1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 2008
California's Share of U.S. Per-capita Personal Income
1.7
-0.1
0.9
-0.6-0.7-1.1
-3.5
-6.3
-8.7
-7.3
-5.8
-1.1-1.2
3.2
-0.4
1.41.5
-0.1
0.4
2.51.71.92.2
1.30.80.60.60.81.11.31.6
2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1
Non-Farm Jobs-SA
Center for Economic Research and ForecastingCalifornia - (saar q-o-q percent change)
Slow Job Growth
Grand Delusions won’t save California
*Green Jobs and forced density*High-Speed Rail
*Social Media “boom”
1950 1970 2000 20120.0
1.0
2.0
3.0
4.0
5.0
6.0
2.5
2.02.4
2.92.8
2.3
3.1
3.7
2.82.6
4.5
5.9
Liberal MarketsSmart Growth Not Calif.California
Med
ian
Mul
tiple
Figure 33
Housing Affordability: 1970-2012LIBERAL, CALIFORNIA & OTHER SMART GROWTH MARKETS
1970: From Census Bureau1980-2009: From Harvard University
2010-2012: Demographia
Median Multiple: Median House Price divided by Median Household Income
Housing Affordability
Demographia Housing Affordability Survey
Affordability: Below 3.0
San FranciscoNew York
Los AngelesBostonSeattle
PortlandRaleighAustin
HoustonNashville
Dallas-Fort WorthDetroit
KalamazooIndianapolis
Fort WayneGrand Rapids
South Bend
7.26.1
5.95.05.0
4.43.5
3.32.92.9
2.72.52.5
2.42.2
2.02.0
Median Multiple: Median housing price divided by median family income
Afforda
ble (3
.0 & Und
er)
Modera
tely Una
fforda
ble (3
.1-4.0
)
Seriou
sly Una
fforda
ble (4
.1-5.0
)
Severe
ly Una
fforda
ble (5
.1 & Ove
r)
-4%
-2%
0%
2%
4%
6%
8%
10%
-2.5%1.3%
3.0%
9.7%
Population per Square Mile
Varia
tion
from
Nati
onal
Ave
rage
No Children: Housing AffordabilityMETROPOLITAN AREAS: WOMEN AGED 15-45: 2010
VARIATION FROMNATIONAL AVERAGE
Median Multiple(Median House Price/
Median Household Income)2001-2010 Average
No own children at homeHigher where higher density
Raleigh
Las Vegas
Austin
Charlotte
Phoenix
Atlanta
Dallas-Fort Worth
Orlando
Houston
AVERAGE
New York
Los Angeles
Buffalo
-20% -10% 0% 10% 20% 30% 40% 50% 60%
Chan
geChange in 5-17 Population: 2000-2010
MAJOR METROPOLITAN AREA EXAMPLES
Source:Census Data
Squandering Our Advantage: Is This California’s Future?
Critical Problems for California
• Widespread Anti-Growth Attitude, particularly in aging, affluent coast
• Too Much Regulation and Taxation• Lack of Balanced Approach on environment• Higher than average income inequality and a
shrinking middle class
Texas California US Aggregate
14.7%
2.1%
5.3%
Growth in Middle Skill Jobs, 2002-2010
Source: EMSI Complete Employment, 3rd Quarter 2010Analysis by Praxis Strategy Group
Seattle-Tacoma-Bellevue, WA
Houston-Sugar Land-Baytown, TX
Austin-Round Rock-San Marcos, TX
San Diego-Carlsbad-San Marcos, CA
Dallas-Fort Worth-Arlington, TX
San Francisco-Oakland-Fremont, CA
Nation
Boston-Cambridge-Quincy, MA-NH
San Jose-Sunnyvale-Santa Clara, CA
Los Angeles-Long Beach-Santa Ana, CA
25.5%
20.5%
16.8%
11.7%
11.5%
11.0%
7.5%
5.7%
4.1%
-1.5%
STEM Occupation Growth, 2002-2012
Source: EMSI Class of Worker Employment, 2012.2
Is There a Way Back?• California needs to take advantage in responsible way of its
competitive strengths in basic industries• Create a better environment for small and immigrant
businesses• Educate and use the skills of newcomers• Focus government from funding pensions and salaries to
necessary infrastructure
PhiladelphiaDetroit
RiversideSeattleBostonAtlantaChicagoPhoenix
WashingtonHouston
DallasNew York
San FranciscoLos Angeles
Miami
2.1
2.5
3.3
4.1
4.6
4.8
5.2
5.8
6.0
6.5
6.5
7.4
7.5
8.0
10.1
Immigration Rates Top 15 RegionsAnnual Average, 2001-2008
Areas are MSA U.S. Census Population Estimates
Ethnic Purchasing Power Continues To Soar
Source: Selig Center for Economic Growth, Terry College of Business, University of Georgia (2008)
Spending Power by Ethnic Groups (in Billions) 1990, 2000, 2008, with 2013 projections
Black
Hispanic
Asian
$318.1
$211.9
$116.5
$590.2
$489.5
$268.9
$913.1
$951.0
$509.1
$1,239.5
$1,386.2
$752.3
2013 2008 2000 1990
Total Los Angeles Co Orange Co Riverside
8.0%
10.4%
8.5%8.3%
5.8% 5.7%
6.9%
4.8%
Self Employment Rate, 2006Foreign Born Native Born
Big Changes in Composition of New Entrepreneurs
Share of All New Entrepreneurs (1996, 2010)
Washington
Maryland
Massachusetts
Virginia
Colorado
New Jersey
California
Delaware
New Mexico
Minnesota
Michigan
New Hampshire
Alaska
Connecticut
Idaho
Oregon
Texas
Utah
Arizona
Nation
1.50
1.49
1.48
1.48
1.36
1.17
1.15
1.15
1.13
1.11
1.10
1.09
1.08
1.07
1.04
1.03
1.03
1.03
1.01
1.00
STEM Job Concentration, Highest States, 2010
California Is Becoming Less Educated Than Other States
Numbers in Table Show Rank Among States in Percent of Population with College Degrees)
Age Group: AA or Higher BA or Higher>64 2nd 5th
45-64 11th 10th
35-44 21st 16th
25-34 30th 23rd
The Pipeline
It all depends on her…
Education is the biggest challenge for California…once our greatest strength
now becoming a critical weakness
The Biggest Challenge: The Issue of Class
• Growth of poorly educated newcomers and youngsters poses a unique problem
• High drop-out rates in high schools can guarantee the rise of an underclass.
• 54% percent of SB public school students qualify for free lunch --- highest percentage in a decade
• Economic development needs to focus on upward mobility — basic industries like agriculture, manufacturing, warehousing, energy can provide a strong base
Low Low Middle Central Middle
Upper Middle
High
-1.3% -1.3%
1.1%
4.1%
3.4%
Low Income Families Not Sharing in RecoveryChange in median income from wage and
salary, 2008-2009 to 2010
“The Great Recession and Distribution of Income in California”Public Policy Institute of California
0.0
5.0
10.0
15.0
20.0
25.0U.S. Census Bureau
CA Capital Outlay Share of Total Expenditures
California Back to Basics
• In 1960 20 percent of state Budget went to infrastructure• Today Less than 3 percent• California schools, roads, ports,
water and power once pre-eminent, now fading
• Solution: A return to basics oriented government focused on industries that can employ a broad segment of Californians
The Good Brown: Pat Brown
The Political Challenge: Get Beyond the Partisan Agenda
“There is no Republican or Democratic way to clean streets."
New York Mayor Fiorello LaGuardia
JOELKOTKIN.COM
A vivid snapshot of America in 2050 focusing on the evolution of the more intimate units of American society—families, towns, neighborhoods, industries.
It is upon the success or failure of these communities that the American future rests.
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